Coal phase-out

Coal is the most carbon intensive fossil fuel and phasing it out is a key step to achieve the emissions reductions needed to limit global warming to 1.5°C, as enshrined in the Paris Agreement. Most emissions from coal are in the electricity sector and, as we already have the technologies that can replace coal, phase out is a relatively cheap and easy option to reduce emissions. Our research shows that the EU and OECD countries must stop burning coal for electricity by 2030, China by 2040 and the rest of the world by mid-century in order to meet commitments made in Paris in the most cost effective manner.

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Impact of our work

The Powering Past Coal Alliance, launched at COP23, in its declaration refers directly to the benchmarks provided in our global coal report, to stress that the Paris Agreement requires coal phase-out by 2030 in the OECD countries and by 2050 in the rest of the world. This alliance, in which national and sub-national partners commit to phasing out existing coal power in their jurisdictions, and to introducing a moratorium on any new traditional coal power stations, aims to increase its membership to 50 by 2018.

In Europe, a number of countries and sub-national authorities have established phase-out dates consistent with the 2030 benchmark provided in our reports. The recently launched BeyondCoal European campaign, is aiming at establishing similar commitments in the remaining member states to achieve a coal phase-out in the European Union by 2030.

Updates

Japan stands at a crossroads ahead of its Presidency of the G20 in 2019. Its potential role as a leader of climate ambition and clean technology depends on it making the right decisions to establish a sunset for coal power generation. This shift must include both its domestic energy policy and its finance for coal technology overseas – a joint briefing by Matthew Webb (E3G) and Paola Yanguas Parra.

As part of the 10th Energy Day in Brasov, one of the major renewable energy related conferences in Romania, Climate Analytics policy analyst Paola Yanguas Parra (centre) was invited to talk about coal phase-out in the European Union in the context of the emission reductions required under the Paris Agreement, and what it means for Romania’s coal-based power generation.

Expanding our work

Coal is still cheap because it does not factor in the costs of environmental and health impacts, so there is no strong market signal to phase out. Many developing countries look to coal to meet their rapidly growing energy demand due to its low price, the availability of this technology and blueprints for coal deployment, as well as financing. However, renewable energy is a low cost alternative and many countries are already well on the way in its deployment at scale, while others have a very high potential for its deployment.

We’re in the process of expanding our work on science-based coal phase out strategies into the Asia-Pacific region, including current projects focusing on Japan and Pakistan. A number of countries in this region are planning to significantly increase their coal capacities. Phasing out coal is a complex problem; solving it must involve many actors and it must occur on parallel with a phase-in of renewables and integration. We work with partner institutions to develop an analytical framework that encompasses not just coal phase-out but also renewables phase-in and integration, aiming to inform policymakers in developing countries.

In China and Pakistan’s coal romance – where is the love for the climate? The Conversation, 30 March 2017
Pakistan is just one example that illustrates these issues. In a recent opinion editorial, Climate Analytics’ Dr Fahad Saeed writes about Pakistan’s plans to massively expand its coal capacity, and the political and financial dynamics behind this development.

Useful links

Investors vs. the Paris Agreement
This briefing paper summarizes research Urgewald and its partners commissioned to determine which institutional investors are backing the world’s top 120 coal plant developers. Currently, over 1,600 new coal plants and units are planned or under development in 62 countries. If built, these new plants would increase the world’s installed coal capacity by over 42%.5 As Bill Hare, CEO of Climate Analytics and lead author of the 4Th IPCC Assessment Report, says:Building these coal plants would lead to a failure to reach the Paris climate goals and put us on a fast-track towards a 4°C temperature rise.

Coal phase-out – regional perspective

CO2 emissions from operating coal power plants in all regions in the world largely surpass emissions budget in line with the Paris Agreement 1.5°C limit. Building new coal power plants would be completely inconsistent with any development in line with meeting the Paris Agreement’s long-term temperature goal.

The cost-optimal pathways show that to be in line with the Paris Agreement, the OECD and EU countries need to phase out coal the fastest – by 2030. China would need to phase out coal around 2040, and the rest of the world by 2050.

Spotlight on the EU

The EU has over 300 power plants with 738 separate generating units (as of July 2016). These are not evenly distributed across the individual member states and those most reliant on coal are Poland, Germany, Bulgaria, the Czech Republic and Romania. Germany and Poland alone are jointly responsible for 51% of the EU’s installed coal capacity and 54% of emissions from coal.

According to our modelling, the EU will exceed its Paris Agreement-compatible emissions budget for coal based electricity generation by 85% in 2050 if all existing coal-fired power plants continue operating to the end of their full life span. If currently announced and planned plants are built in the coming years, this number will rise to almost 100%.

For the EU to remain within its carbon budget, member states must first shelve plans for any additional coal-fired generating capacity and secondly, must start actively shutting down currently operating units at an increased rate. Analysis suggests 25% of currently operating coal-fired power units need to be shut down by 2020, rising to 72% by 2025, before a complete shutdown by 2030.

The critical question is which criteria should determine when individual units are switched off? In our report A stress test for coal in Europe under the Paris Agreement we outline two possible strategies for how the EU could achieve a complete phase out of coal use in electricity generation, proposing a shutdown date for each coal-fired power generating unit.

Both methods evaluate units on emissions performance and profit generation potential. The first approach, the Regulator Perspective, prioritises shutting down the most carbon intensive plants first, where as the second approach, the Market Perspective, prioritises shutting down the least valuable plants in terms of revenue generation potential.

EU coal vs air pollution regulation

Apart from being the largest source of CO2 emissions, coal combustion is also a major threat to public health globally. Pollution from coal plants is responsible for about 23,000 premature death in the EU every year. About 82% of EU, 80% German and virtually all Polish coal power plants do not comply with a new EU regulation on industry air pollution emissions standards that they need to meet by 2021. Read more

Spotlight on Japan

In Japan, the world’s sixth largest emitter, more than half of electricity emissions in 2016 came from coal – around 20% of its total greenhouse gas emissions – from around 45GW of coal-fired power generation capacity. Yet it is planning to add a further 18 GW of new and additional coal power plants to its existing 45GW, of which 5GW are already under construction, prioritising it over renewable energy.

If Japan builds the coal-fired generation it is planning, it will exceed its Paris Agreement emissions budget (2018-2050) by nearly 300 percent.

Investing in new coal capacity in Japan could leave investors with stranded assets, as the world moves away from coal. Many big Japanese companies have international commitments such as R100 and Science Based Targets (SBT), which could be undermined by coal. They risk losing competitiveness in the global markets as Japan invests in coal rather than the global trend towards renewable energy.

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